Why then did a Keynesian consensus about the proximate causes of the economic crisis emerge so quickly? And why did it collapse so quickly after 2010, giving way to continuing dissensus between Keynesians and their pro-austerity antagonists?
Because, Farrell and Quiggin suggest, macroeconomics created a “hinge issue” affecting the internal struggles of both the economic profession and the political elite. They explain:
When economists appear to share a consensus on a given topic, then policymakers whose policies are in line with the consensus will enjoy an advantage over those whose policy positions contradict it. […]However, because the internal prestige structures of economics favor economists who have perceived policy influence, disadvantaged policymakers have reason and opportunity to destabilize professional consensus by elevating dissident economists in policy discussion.
Consensus, Dissensus, and Economic Ideas: Economic Crisis and the Rise and Fall of Keynesianism
Authors: Henry Farrell, John Quiggin
From: George Washington University – University of Queensland
Economists, policymakers and the electorate
Fiscal policy enjoys less institutional insulation from electoral party politics than monetary policy or financial regulation, where we might expect expert groups to have greater influence (Baker 2013). Fiscal policy displays many of the features of what James Thurber (1996) calls a macro policy system: general policy decisions with major political effects, high party political interest and visibility, divisiveness, high media coverage and a plurality of participants. When such characteristics are present, electoral calculations and party strategy will shape the ways in which expert knowledge is used and deployed.
Andrew Baker – University of Sheffield
When anti-Keynesian arguments are invented on the fly
A large part of academic macroeconomics was and is implacably opposed to Keynesian views, insisting that business cycles reflect real shocks and aren’t amenable to policy; but this “equilibrium macro” view played little role in post-2008 debates. Instead, we had novel doctrines like Alesina-Ardagna expansionary austerity and the Reinhart-Rogoff debt threshold that went straight from working papers to official orthodoxy.
Paul Krugman – CUNY
Economic consensus or beliefs of some superstars?
It was striking how the economics blogosphere sprung up as a prominent alternative channel for the distribution of heterodox ideas in the wake of the crisis. “Market monetarist” views may still be on periphery but “the first economic school of thought to be born in the blogosphere” (according to the Economist) and other unorthodox views circulating among subgroups are likelier to enter into policy realms during periods of institutional upheaval (such as the one we now appear to be in).
Stephen C. Nelson – Northwestern University
The above debate is part of a symposium published in January 2018 by International Studies Quarterly.
The Rise and Fall of Keynesian Ideas During the Great Recession
